Apple is considering expanding iPhone production in Brazil as a way to circumvent import duties announced by US President Donald Trump. The country benefits from lower US reciprocal tariffs set at 10%, the Brazilian publication Exame reported, citing its sources.
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In the current manufacturing chain, with more than half of the supply coming from China, Apple smartphones can be 40% more expensive for American consumers.
India, which has become important to Apple's strategy in recent years and is set to double iPhone production between 2024 and 2025, has also been hit, with a 26% tariff on its goods effective April 5.
Apple sells more than 220 million iPhones a year and has its largest market in the U.S. With such high tariffs, the company faces a dilemma: absorb the costs and reduce its margins, or pass them on to consumers, which could directly impact demand.
Prices could rise 30% to 40%, according to analysts polled by Reuters and Counterpoint Research. Apple shares fell 9.3% on Thursday, their worst day since March 2020.
Jundiai plant already assembling iPhones in Brazil
The possibility of expanding production in Brazil was already being explored last year, with equipment and industrial processes being upgraded. Foxconn in Jundiaí is already assembling the base models of the iPhone 13, 14, 15 and recently received permission from the Brazilian Telecommunications Regulatory Agency (Anatel) to produce the iPhone 16.
The approval currently only applies to the base model, while more advanced models like the iPhone 16 Pro and Pro Max continue to be imported. However, increased smartphone production could gain popularity if Apple needs to reallocate its global production to reduce tariff costs.
Foxconn in Brazil operates under a special regime that allows it to reduce local taxes, but so far this production has not led to a significant reduction in the final price of iPhones in the country. So the focus may change: using Brazil as an assembly point for exports to the US market, where tariffs on goods from Brazil are lower than on goods from China and India.
Brazil becomes Plan B amid logistics crisis
According to Counterpoint, the tariff hike could force Apple to reconsider its long-term plans for India.
“If high tariffs on iPhones made in India persist, it will impact demand in the US,” the consultancy said. For Brazil, this could be a rare opportunity.
Apple's decision will depend on the ability of the Brazilian plant to handle high production volumes without disrupting deadlines, logistics and quality control.
Let us recall
US President Donald Trump announced the introduction of duties on all goods imported from abroad. The Republican announced this on Wednesday, April 2, at a press conference in the White House garden. The basic tariff will be 10%, but for many countries it turned out to be higher.
Customs duties on goods from China will be 34%, from EU countries – 20%, from Switzerland – 31%, from Great Britain – 10%, from Ukraine – 10%, from Israel – 17%, from Kazakhstan – 27%. One of the highest duties is imposed on Vietnam (46%), Cambodia (49%), Laos (48%). Russia is not mentioned in the list.
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